Regional impacts of launching national carbon emissions trading market: A case study of Shanghai

• Published in: Applied energy Vol. 230; pp. 232 - 240
• Main Authors: Liu, Zhiqing, Geng, Yong, Dai, Hancheng, Wilson, Jeffrey, Xie, Yang, Wu, Rui, You, Wei, Yu, Zhongjue
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 15-11-2018
• Subjects: IMED|CGE model; National carbon emissions trading; NDC target; Shanghai; Urban governance; Urban governance; National carbon emissions trading; IMED|CGE model; Shanghai; NDC target
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2018.08.117

•Initiating national carbon trading could help achieve China’s INDC target.•We investigate changes in carbon prices and carbon trading volumes under different carbon trading scenarios.•Revenues generated through a national carbon trading program could offset macroeconomic losses.•Sectoral output losses will decrease substantially under ETreg scenario relative to BaU scenario.
This study investigates the impacts of launching a national carbon trade market through the IMED|CGE (Integrated Model of Energy, Environment and Economy for Sustainable Development|Computable General Equilibrium) model, between Shanghai and the Rest of China (ROC). Five scenarios are established by considering China’s Nationally Determined Contributions (NDC) targets, including a baseline scenario (BaU scenario), a carbon cap on ETS participating sectors scenario (CAPsec scenario), a carbon cap on Shanghai and ROC regions scenario (CAPreg scenario), a carbon cap scenario with local carbon emissions trading among ETS participating sectors (ETsec scenario) and a carbon cap scenario with inter-regional carbon emissions trading (ETreg scenario). The results under the ETreg scenario predict a carbon price of 164.64 USD/tCO2 and a total carbon trade volume of 189.91 Mt by 2030. The metal smelting sector will be the largest seller of emissions quotas in Shanghai, whereas the power generation sector will be the largest buyer. Due to its higher carbon mitigation cost and increasing autonomous carbon intensity, the aviation sector will face more challenges to reduce emissions among ETS participating sectors in Shanghai. The results indicate that launching a national carbon trade market could generate both economic and environmental benefits and help China achieve its NDC targets.